ROCKVILLE, MD—Choice Hotels International, Inc. reported that the company outperformed its competitors during the third quarter of 2020.
“Choice Hotels’ proven portfolio of well-segmented brands, geographic footprint, and strength in leisure travel continued to drive results that outperformed the industry and position the company to benefit from the recent shifts in consumer behavior,” said Patrick Pacious, president/CEO, Choice Hotels. “We believe that our strategy of growing our limited-service brands in the right segments and the right locations will allow us to continue to grow our share of travel demand over the long term.”
In the third quarter of 2020, Choice Hotels continued to provide a broad range of support to its franchisees, guests and communities while improving its overall financial and liquidity position, the company reported. Highlights of third quarter and year to date 2020 results include:
- Domestic systemwide revenue per available room (RevPAR) outperformed the total industry by nearly 20 percentage points, declining 28.8% for third quarter 2020 compared to the same period of the prior year, and exceeded the chain scale segments in which the company competes, as reported by STR.
- Fourth quarter domestic RevPAR through October 24, 2020 has continued the pattern of sequential quarterly improvement, and October 2020 RevPAR is expected to decline by approximately 25% from the same period of 2019.
- The company awarded 232 new domestic franchise agreements year-to-date through Sept. 30, 2020, a 38% decrease compared to the same period of the prior year. Nearly 70% of the agreements awarded year-to-date through Sept. 30, 2020 were for conversion hotels.
- Net income was $14.5 million for the third quarter, representing diluted earnings per share of $0.26.
- Third quarter adjusted net income, excluding certain items, decreased 52% to $36.8 million from third quarter 2019.
- Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the third quarter were $74.9 million, a 34% decrease from third quarter 2019.
- The company reported cash flow from operations of more than $68 million in the third quarter 2020.
The company’s domestic systemwide occupancy rate has improved since the trough of 28% in early April, with average weekly occupancy consistently exceeding 50% since the week of June 21, 2020 through October 24. For the month of October, domestic systemwide occupancy is expected at 52%.
The company’s upscale portfolio achieved material domestic systemwide RevPAR share gains versus its local competitors for third quarter 2020, compared to the same period of the prior year, with the Ascend Hotel Collection achieving gains of nearly 19 percentage points. In addition, the company’s upscale brands’ year-over-year change in domestic systemwide RevPAR outperformed the upscale segment by 14 percentage points.
The company’s extended-stay portfolio continued to outperform the industry throughout the third quarter, with average domestic systemwide occupancy rates of 74%. The portfolio achieved average weekly occupancy rates of 70% since the onset of the pandemic in mid-March through Oct. 24, 2020—exceeding the industry average by 29 percentage points. Specifically, the WoodSpring Suites brand experienced occupancy levels of 77% in the third quarter, outperforming the industry by nearly 29 percentage points, and the brand’s monthly occupancy levels have remained above 75% since the last week of June. In addition, the Suburban brand’s occupancy rates increased by 60 basis points in the third quarter compared to the same period of 2019.
All select-service midscale brands achieved domestic systemwide RevPAR share gains versus their local competitors for third quarter 2020 compared to the same period of the prior year. The Comfort brand family’s domestic systemwide year-over-year RevPAR change outperformed the upper-midscale chain scale by 840 basis points.
In the third quarter, the company outperformed the industry on the year-over-year domestic RevPAR change and achieved RevPAR share gains versus its local competitors across all location types, as reported by STR.
The company currently expects the impact of COVID-19 on its year-over-year RevPAR change will be less significant for the quarter ended Dec. 31, 2020 than the quarter ended Sept. 30, 2020 based on the continued resilience of leisure demand and Choice’s relative outperformance versus the industry.